N.Z. Shadow Board Says Central Bank Should Extend Rate Pause

Jan. 30 (Bloomberg) -- New Zealand’s central bank should
hold the official cash rate at a record-low 2.5 percent at its
Jan. 31 meeting, according to the majority of a nine-member
panel of economists, academics and company executives.

Six of the so-called shadow board set up by the New Zealand
Institute of Economic Research Inc. said Governor Graeme Wheeler
should leave the rate unchanged this week, the Wellington-based
institute said in an e-mailed statement. Two members preferred a
rate cut and one is evenly split between no change and a cut.

All 16 economists surveyed by Bloomberg News predict no
change in rates this week and that Wheeler’s next move will be
to raise borrowing costs, probably in the second half of 2013.
Traders are pricing in a more than 90 percent chance the Reserve
Bank of New Zealand won’t change the benchmark borrowing cost
until the second half of the year, according to interest-rate
swaps data compiled by Bloomberg.

“On balance, the shadow board thinks rates should be held
at low levels,” Kirdan Lees, an economist at the institute,
said in the statement. “Lowering interest rates further has
more support than raising rates at this point.”

The shadow board members indicate where they think interest
rates should be, not what they expect will happen, the institute
said. New Zealand’s official cash rate hasn’t been changed since
March 2011.